News Archive


Oil price will average less in 2015 than during financial crisis: Reuters poll


(Reuters) – Crude oil will likely continue falling before posting only a mild recovery in the second half of this year, a Reuters survey of analysts showed on Friday, with prices set to average even less in 2015 than during the global financial crisis.

The survey of 33 economists and analysts forecast North Sea Brent crude LCOc1 would average $58.30 a barrel in 2015, down $15.70 from last month’s poll, in the biggest month-on-month forecast revision since prices last collapsed in 2008-2009.

If the forecasts for 2015 prove correct prices will average the lowest since 2005, even if they recover after June, illustrating the impact of OPEC’s decision to maintain output in the face of fast-growing U.S. shale output.

“It should be a year of differing halves. The likelihood of further near-term fund selling will see Brent trade down to $42 per barrel and WTI at $40 per barrel by the end of Q1 2015,” ANZ analyst Mark Pervan said.

“The mood will remain cautious for the remainder of the first half of the year, before high-cost U.S. supply discipline starts to emerge in the third quarter,” he added.

Twenty seven of the 28 analysts who contributed to data for both the December and January Reuters polls have slashed their forecasts. More than half of those lowered their projections by $15 a barrel or more from last month.

European investment bank Barclays, which has the lowest forecast according to the poll, cut its 2015 price outlook for Brent by almost 40 percent to $44 per barrel.

Goldman Sachs, widely-seen as one of the most influential banks in commodity markets, sees WTI hovering around the $40 per barrel mark for much of the first half of this year. It has slashed its 2015 Brent forecast by $33.40 to $50.40 per barrel.

Most of the analysts were in agreement that the Organization of the Petroleum Exporting Countries (OPEC) would maintain its stance of not cutting production despite oil prices touching multi-year lows, with any tightening of supplies expected to come from higher-cost producers outside the group.

“Low crude prices negatively affect (U.S.) shale oil profitability,” Intesa Sanpaolo analyst Daniela Corsini said.

“I expect to see lower rig counts and lower investments over the next months… before the end of the year, shale oil supply should start contracting.”

Brent has averaged $49.57 so far in January, consolidating over the past two weeks after hitting a near six-year low of $45.19 a barrel on Jan. 13. It was trading around $48.75 on Thursday.

The poll forecasts U.S. light crude CLc1 will average $54.20 a barrel this year and $64.90 in 2016. WTI has averaged $47.24 a barrel so far in 2015, hitting a post-2009 low of $43.58 on Thursday.

Brent’s premium CL-LCO1=R to U.S. crude, known as the Brent-WTI spread, is expected to widen to $4.10 a barrel in 2015 from around $2.20 so far this year, the poll showed.

That would be the smallest annual Brent-WTI average since 2010. Brent-WTI averaged more than $12.50 a barrel between 2011-2014 as the shale boom drove the U.S. benchmark to a steep discount to its North Sea rival.

(Writing by David Sheppard in London; Editing by Michael Urquhart)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/q26Xj2LJJTU/story01.htm

European investment fund set for September start


FRANKFURT (Reuters) – A fund to bolster investment in Europe should be up and running by September, an EU official said on Friday, outlining the timetable for a highly leveraged scheme to bolster growth in a moribund EU economy.

The European Fund for Strategic Investments, which can invest in projects from infrastructure building to expansion of small businesses, is the European Union’s flagship scheme to help address slack growth.

Jyrki Katainen, Vice President of the European Commission responsible for jobs and growth, told journalists that its set-up could be finalised by European Union leaders in June, with a start date some months later.

“I expect that the fund itself will be up and running, let’s say, in September,” he said, on a whistle-stop tour of Europe to drum up investor and government interest in the scheme.

Katainen said, however, that it was unclear which governments would invest money in the scheme, intended to be a 315-billion-euro ($358 billion) investment vehicle based on modest financial guarantees given by states.

“There has been quite a lot of interest toward the fund but nothing has been realiZed yet,” he told journalists. “We built the fund so that it can operate even without any additional commitments. We don’t have any expectations.”

The late start-date may disappoint some. European Central Bank President Mario Draghi, for example, recently urged EU leaders to speed up the project.

The dire economic outlook prompted Draghi last week to unveil last week a roughly 1-trillion-euro plan to print fresh money, chiefly to buy government bonds.

He has told governments to do their part, by pursuing economic reforms.

But finding agreement among the 19 countries in the euro zone, from Germany to Greece, is difficult. This also slows progress on broader EU schemes such as the joint investment fund.

(Reporting By John O’Donnell; editing by Philip Blenkinsop)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/-E5jboVUBKM/story01.htm

Oil rises, but set for record run of monthly falls


LONDON (Reuters) – Oil rose above $49 a barrel on Friday, supported by renewed violence in Iraq but with a persistent global supply glut keeping the market on course for a seventh straight month of declines, its longest bear run on record.

Benchmark Brent crude prices have kept within a band of $45-$50 a barrel since hitting a six-year low on Jan. 13, but analysts have not ruled out further declines as global inventories continue to rise.

Data this week showed U.S. crude oil inventories had reached their highest levels since the 1930s.

Brent oil futures LCOc1 were up 37 cents at $49.50 per barrel at 1106 GMT (6:06 a.m. ET), while benchmark U.S. WTI futures CLc1 were up 42 cents at $44.95 a barrel.

Brent is on track to post a 14 percent fall for January, marking a seventh month of decline and the longest-running monthly drop since Reuters records started in 1988.

A Reuters survey of analysts showed on Friday that oil will likely continue falling before posting only a mild recovery in the second half of this year, with prices set to average even less in 2015 than during the global financial crisis. O/POLL

The survey of 33 economists and analysts forecast North Sea Brent crude would average $58.30 a barrel in 2015, down $15.70 from last month’s poll, in the biggest month-on-month revision since prices last collapsed in 2008-2009.

“The fundamentals remain weak, with seasonal refining maintenance resulting in stock builds on what is an already high base for stocks,” said Amrita Sen, chief oil analyst at London-based Energy Aspects.

The International Energy Agency this month said a price rebound could take some time despite increasing signs of the downturn easing, with lower output from North America shale production and higher demand due to the low prices.

The market found support in news of renewed violence in key oil producer Iraq, where Islamic State militants struck at Kurdish forces southwest of the oil-rich city of Kirkuk.

(Additional reporting by Henning Gloystein in Singapore; editing by Jason Neely and John Stonestreet)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/OUAnIAS9TaU/story01.htm

McDonald’s franchisees to new CEO: back-to-basics, fast


LOS ANGELES (Reuters) – McDonald’s franchisees have a fast order for the fast food giant’s new CEO – get back to basics. In interviews franchisees and advisors to restaurant owners say they hope the new chief will clean up a huge menu to focus on burgers and fries.

McDonald’s on Wednesday announced that Chief Brand Officer Steve Easterbrook would replace Don Thompson as chief executive after he had held the post just two and a half years.

Easterbrook, 48, turned around McDonald’s operations in the UK, where he was born, by putting the focus back on its burgers and burnishing consumer perceptions about the company, according to press reports.

A cricket enthusiast who earned a reputation in the UK as being funny, fair and a lover of simplicity, Easterbrook will also be a rare McDonald’s CEO in that he has experience running other restaurant chains.

“I will be very curious to see if this new guy continues on with what Thompson has been doing … or if he will put some new ideas in. I’m very hopeful,” said Kathryn Slater-Carter, who operates one of McDonald’s restaurants in Daly City, California.

The world’s largest fast-food chain, with more than 36,000 restaurants around the globe, is struggling to appeal to younger and more upscale diners who are seeking out fresher, healthier fare.

Over the last few years, McDonald’s has expanded its menu to broaden its appeal. While that effort initially bolstered sales, franchisees now blame sprawling menus for slowing down service and are calling on the chain to dump menu items ranging from espresso to McWraps.

Some skeptics questioned whether Easterbrook, an insider with some two decades at the chain who takes the helm on March 1, is the right person to make the tough decisions needed to fix what ails the company.

GLOBAL CHOPS

Supporters find hope that fact that from 2011 to 2013, Easterbrook ran PizzaExpress, a British chain that markets itself on quality and freshness, and then became CEO at Wagamama, a Japanese-inspired noodle chain, before returning to McDonald’s.

Easterbrook’s global chops may come in handy as the chain fights to recover from a food scare in China that battered Asian sales and wrestles with economic weakness and political upheaval in Europe, its top revenue market. Its image in the United States is also getting a drubbing from McDonald’s burger flippers, who have held frequent protests calling for higher wages.

Richard Adams, a former McDonald’s franchisee who now consults current ones, said that most U.S. McDonald’s owners don’t have personal experience with Easterbrook but that they are “cautiously optimistic” about his appointment.

Those same franchisees had a rough ride under Thompson.

Monthly sales at established U.S. restaurants increased in fewer than half of the 30 months he was in the top job.

The company attempted to stem market share losses to smaller and more nimble rivals ranging from Wendy’s Co and Burger King to Chipotle Mexican Grill Inc and Chic-fil-A with frequent specials and giveaways.

While such discounts helped the parent company, which gets royalties from franchises based on revenues, they squeezed the profits of franchisees. Beyond that, a push to rebuild or remodel most restaurants burdened many franchisees with debt but didn’t always deliver a promised pop in sales.

‘CHORUS OF NO’S’

Adams said morale among U.S. franchisees is at the lowest point since the late 1990s, when overbuilding hurt franchisees.

“Made For You”, a 90s-era burger customization program that required investments of around $55,000 per outlet, made matters worse by battering service speed and sales.

Thompson revived bad memories of that era with a project called “Create Your Taste,” which he insisted would succeed where “Made for You” had failed due to improved technology.

While Thompson said the plan would allow McDonald’s to become more like Chipotle and Subway by letting customers pick the ingredients in their meals, Adams said franchisees aren’t buying in. Their reaction to the plan, he said, has been “A chorus of No’s.”

While most franchisees are reluctant to speak to the press, they offered blunt recommendations in a survey published earlier this month by Janney Capital Markets analyst Mark Kalinowski.

Change is “moving too slow, let’s bite the bullet,” one survey respondent said.

They suggested dropping McCafe espresso drinks, which critics say don’t sell enough to pay for the electricity used by the machines that make them. Thompson spearheaded McDonald’s McCafe expansion during his stint as head of the U.S. business.

They also want to cut the number of Happy Meal options, to get rid of the hard-to-make McWraps and other poorly performing menu items, and to eliminate redundant items such as the McDouble and Double Cheeseburger.

Thompson had made some efforts to trim back menus, but franchisees say they didn’t go far enough.

“We just have no momentum any more,” one franchisee said.

(Additional reporting by Martinne Geller and Freya Berry in London; Editing by Christian Plumb)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/IYKlmgWq93A/story01.htm

Dollar set for record run, European shares rise


LONDON (Reuters) – The dollar was poised to end January with its longest run of gains since it was floated in 1971 while European shares were set for their best monthly performance in three years, despite sagging slightly on Friday.

The dollar, bolstered by expectations the U.S. Federal Reserve will be the first major central bank to raise interest rates, has gained nearly 5 percent against a basket of currencies .DXY this month.

It paused on Friday at 94.752, ahead of U.S. GDP data due at 1330 GMT (4:30 a.m ET), which a Reuters poll tipped to show economic growth of 3.0 percent. But the currency stayed close to an 11-year high and was set to mark seven consecutive months of gains.

European shares also took a breather on Friday but were headed for strong monthly gains in anticipation of hundreds of billions of euros being pumped into the euro zone.

Russia surprised markets by cutting interest rates as fears of a Russian recession mount following a plunge in global oil prices and Western sanctions over the Ukraine crisis. The move put pressure on the rouble RUB, which skidded as much as 4 percent against the dollar, and also bolstered expectations that Turkey will cut rates again next week, sending the lira TRYTOM=D3 to a new record low.

U.S. shares looked set to open lower, after surging late on Thursday as an upturn in oil prices, stronger-than-expected U.S. jobs numbers and a rally in Apple (AAPL.O) and Boeing (BA.N) helped offset some disappointing earnings. SPc1 DJc1.

Having opened higher, European stocks dipped as troubled Banca Monte dei Paschi di Siena (BMPS.MI) lost 6.5 percent after sources said a planned capital increase at the lender might be bigger than expected.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.2 percent at 1,470.40 points, but still up 7.4 percent in January – on track to post its best monthly performance in three years and outpacing Wall Street where the SP 500 .SPX is down 1.8 percent since the start of the year.

“It’s a little pause ahead of the weekend, but there’s no real selling pressure and technically, charts shows that indexes are still in a bullish trend. People are just cautious, with a couple of potential negative catalysts like Russia and Greece in mind, so it’s tempting to book profits,” Saxo Bank trader Andrea Tueni said.

European stocks have recently been lifted by expectations that a bond-buying program by the European Central Bank will help the region’s economic recovery, while a weaker euro and lower oil prices are seen reviving corporate profits.

Yields on euro zone bonds dropped, with deflation risks taking center stage again after some reassurances from the new Greek government that it is looking for common ground with EU partners on its bailout. EUR/GVD

Data from the 19-nation bloc showed inflation falling further into negative territory in January, with consumer prices falling 0.6 percent year-on-year. ECONEZ

EYES ON U.S GDP

The euro edged down against the dollar to $1.1305 EUR= as markets awaited U.S. GDP data.

The single currency is down over 6 percent for the month, its worst performance in 2-1/2 years, having fallen on the expectation, and then the confirmation, that the ECB would unleash QE to shore up the flailing euro zone economy.

Those gains have helped the dollar.

“There are a lot of investors waiting for a move higher in the euro to reload (on the dollar),” said Michael Sneyd, a currency strategist at BNP Paribas in London. “We are still dollar bulls.”

Gold edged up on Friday and was set for its biggest monthly gain in almost a year after a rally fueled by the ECB’s announcement of its 1.1 trillion euro easing program.

Brent crude edged up LCOc1 to $49.3 a barrel, supported by renewed violence in Iraq, but with a persistent global supply glut keeping the market on course for a seventh straight month of declines, its longest bear run on record.

(Additional reporting by Atul Prakash, Marius Zaharia and Patrick Graham in London and Lisa Twaronite in Tokyo; Editing by Janet Lawrence and Susan Fenton)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/cRKHs5ZdDZ0/story01.htm

Three months on, fruitless CEO search overshadows Sanofi


PARIS (Reuters) – Barring a last-minute breakthrough, drugs firm Sanofi’s Chairman Serge Weinberg may have to acknowledge in his results presentation next week that the hunt for a new chief executive is not going well.

At least three potential candidates in a narrow field have turned their back on the job heading France’s largest company.

The manner of Chris Viehbacher’s shock dismissal three months ago, and the surprisingly small pay-off he won last week, have cast a long shadow over the process.

“I think it is going to take time,” said a source close to the company. “What we risk missing in the meantime is a strategic vision that you cannot have without a deep knowledge of the pharmaceuticals sector.”

Last week Christophe Weber, the French chief operating officer of Japan’s Takeda Pharmaceutical Co, told Reuters he had rejected an approach.

Paris-schooled Olivier Bohuon, chief executive of British medical devices maker Smith Nephew, told staff in November he had no plans to leave, and in the same month, former Wyeth boss Bernard Poussot joined the board of Sanofi’s rival Roche.

AstraZeneca Chief Executive Pascal Soriot, another prominent French pharma executive, has played down any interest by saying he sees himself as more Australian than French.

Weinberg, who will be 64 on Feb. 10 and does not have a pharmaceuticals background besides his five years on the board, is running Sanofi himself while board member Jean-Rene Fourtou conducts a search — one which began well before Viehbacher was fired.

Weinberg has said an understanding of Sanofi’s French culture is important to the search for “mainly outside candidates”.

But he has rebuffed suggestions that non-French candidates are unwelcome, despite his experience with the German-Canadian Viehbacher, who ruffled establishment feathers by keeping secret plans to cut French jobs, and by moving his domicile to the United States.

Nevertheless, insiders say a command of the French language would be important.

Viehbacher was fired abruptly on Oct. 29 last year, hours after he had presented a poor set of third-quarter results, and days after a leaked letter he sent to the board showed he had found out months earlier of Weinberg’s plan to get rid of him.

The news came as a shock to investors, who had hitherto seen the outspoken and affable former GlaxoSmithKline executive as a strong manager. Weinberg put the sacking down to poor execution and lack of communication with the board — citing partly a poor outlook for the diabetes division, which accounts for more than 30 percent of profits.

SEVERANCE QUESTIONS

It has not been all bad news for post-Viehbacher Sanofi. Last week, U.S. health regulators accepted its application to review a potent cholesterol drug on a priority basis, potentially giving it the upper hand in a fierce race to market with Amgen.

And Sanofi’s shares, down about 1.7 percent at 82 euros since the sacking and the poor third-quarter figures, have recovered most of the losses suffered after the initial shock.

But some believe the discount they carry to their peer group should be bigger. Citi analysts earlier in January downgraded Sanofi to ‘Sell’ from ‘Neutral’, targeting a 70 euro price that implies a 2016 price-to-earnings ratio of 13 times compared with a sector average of 15.

Meanwhile, last week’s announcement of Viehbacher’s severance settlement has raised new questions about whether there is more behind his dismissal.

Viehbacher received 4.44 million euros ($5 million) in severance, even though the amount stipulated under the terms of his employment was 5.92 million euros.

“The trouble with finding a successor hinges on the fact that we don’t know the real reason he was fired, and because a lot of people are asking themselves questions about the subject,” said an industry insider who has spoken to some potential candidates.

“The very low pay-off he received only reinforces the idea that the reasons he was fired are not the ones that have been talked about.”

A Sanofi spokeswoman confirmed that the negotiated pay-off was lower than specified in Sanofi’s annual report filing but she said these terms did not apply because his dismissal was not related to a change in control or strategy.

She declined to comment further on why his severance package was so low.

Viehbacher did not respond to an emailed request for comment.

Fourth-quarter results are due on Feb. 5.

($1 = 0.8840 euros)

(Editing by Susan Thomas)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ERVCO10iAdw/story01.htm

Qatar Airways takes $1.7 billion stake in British Airways-owner IAG


LONDON (Reuters) – Qatar Airways has bought a 9.99 percent stake in International Consolidated Airlines Group (IAG) worth around 1.15 billion pounds ($1.7 billion), building closer ties with the owner of its partners British Airways and Iberia in the oneworld alliance.

Qatar’s national airline said it would look to strengthen commercial ties with the European carrier and may consider increasing its stake over time, although it was not currently intending to exceed 9.99 percent.

“IAG represents an excellent opportunity to further develop our Westwards strategy,” Qatar Airways Chief Executive Akbar Al Baker said on Friday, referring to its aim of expanding in western markets.

Non-European shareholders of IAG including Qatar Airways are subject to an overall cap on ownership as a result of the requirement for EU airlines to be majority owned by EU shareholders.

Shares in IAG, which have risen by 44 percent in the last three months, were trading up 0.3 percent at 565.5 pence. They earlier reached 590 pence, the highest level since the group was formed four years ago.

Analyst Mark Irvine-Fortescue at brokerage Jefferies said Qatar’s investment was a strong endorsement of IAG and the tie-up would create opportunities in southeast Asia, India and the Middle East, where Qatar has an extensive network.

He said huge capacity growth from Middle East carriers such as Qatar, Etihad Airways and Emirates was putting pressure on the hubs of Europe’s carriers.

“This strategy could be seen as a defensive ‘if you can’t beat them, join them’ move and should in time improve IAG’s structural and competitive positioning, possibly at the expense of Air France and Lufthansa,” he said.

IAG Chief Executive Willie Walsh said in a statement: “We will talk to them about what opportunities exist to work more closely together and further IAG’s ambitions”.

IAG, a leading transatlantic carrier, is trying to buy Irish airline Aer Lingus for $1.5 billion, a deal that will increase its take-off and landing slots at its full-to-capacity London Heathrow hub.

Qatar Airways, owned by the country’s sovereign wealth fund, has competed with regional rivals Emirates and Etihad Airways to become major global carriers. Its visibility in Europe has been strengthened by a sponsorship deal with Spanish soccer club Barcelona.

It joined oneworld in 2013, becoming the first Gulf airline in enter into a global alliance, which allows airlines to team up via code-sharing agreements to boost the number of flights they offer.

($1 = 0.6637 pounds)

(Editing by Kate Holton and David Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/zVUFkFDSovI/story01.htm

AWS move, disclosure suggest Amazon yielding more to Wall Street


SAN FRANCISCO (Reuters) – After years of giving investors the cold shoulder, Amazon.com Inc (AMZN.O) is starting to warm up to Wall Street.

The No. 1 U.S. online retailer was unusually forthcoming during its fourth-quarter earnings call on Thursday, saying it will break out results this year, for the first time, for its fast-growing cloud computing unit, Amazon Web Services.

The company also said it would focus on getting more out of its assets in 2015 and emphasized that it was already starting to reap benefits from investments in steaming video and logistics infrastructure.

“The team … is putting even more energy around making sure we get great productivity around our various fixed and variable investments,” Chief Financial Officer Tom Szkutak told reporters on a conference call.

This was a shift in tone for Amazon, which typically refuses to disclose more than the most basic details, including how many members belong to its $99-a-year Prime program or if its wide-ranging investments are paying off.

Chief Executive Jeff Bezos has deflected criticism of his spending by emphasizing that he takes a much longer view than most investors. Late last year, he boasted that he spends just six hours a year on investor relations.

But Amazon shares dropped by more than 20 percent last year as investors grew weary of its spending on film and television productions, grocery delivery and consumer devices. Amazon also has fallen short of estimates in five of the last eight quarters.

The additional information shared during Amazon’s fourth-quarter results as well as its emphasis on becoming more efficient signaled a new willingness by Amazon executives to listen to investors as well.

“This quarter, Amazon flexed its muscles and said this is what we can do when we focus on profits,” said Rob Plaza, senior equity analyst for Key Private Bank. “If they could deliver that upper teens, low 20s revenue growth and be able to deliver profits on top of that, the stock is going to respond.”

The change is unlikely to be dramatic. When asked whether this quarter marked a permanent shift in Amazon’s relationship with Wall Street, Plaza laughed: “I wouldn’t be chasing the stock here based on that.”

Still, the shift is a good sign for investors, who have been clamoring for Amazon to disclose more about its fastest-growing and likely most profitable division that some analysts say accounts for 4 percent of total sales.

The change seemed unlikely until AWS made up 10 percent of Amazon’s net sales, the threshold at which U.S. securities regulators require disclosure.

Szkutak also added that a large portion of Amazon’s capital expenditure will go toward AWS, which has stepped up its efforts to win over lucrative contracts with large, corporate clients.

“You should expect that we’ll be spending more in terms of CapEx to support our web services business, which is growing very fast,” he said on a separate call with analysts. “You should expect us to add fulfillment capacity.”

In a statement, Bezos also revealed that Prime memberships grew 53 percent worldwide in 2014, with international markets outpacing U.S. growth – the first time the company shared such figures. Amazon spent $1.3 billion on its video operation and billions on Prime shipping, Bezos said.

Customers who tested Prime for streaming video were more likely to subscribe and stay longer than those who joined through other channels, Szkutak said.

Amazon’s spending on packing and shipping orders rose just 17.3 percent, nearly half the increase in the 2013 fourth quarter. Having more warehouses has helped lower transportation costs and Amazon is relying more on third-party sellers, which Plaza said generate three times the margin of direct Amazon sales.

There was little discussion of consumer devices, like the Fire smartphone Amazon debuted last year to lackluster reviews. In the fourth quarter, Amazon worked through some of the $80 million in excess phone inventory it had at the end of September, Szkutak said.

(Reporting by Deepa Seetharaman; Editing by Richard Chang)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/1RJKsqFQqkY/story01.htm

Visa reports better-than-expected profit


(Reuters) – Visa Inc (V.N), the world’s largest credit and debit card company, reported a better-than-expected quarterly profit on Thursday due to a good holiday season and a strengthening U.S. job market that encouraged people to spend.

The company said e-commerce, which mainly uses cards, was “extraordinarily strong during the holiday season.”

But Chief Executive Charlie Scharf said consumer spending on the whole, while at “reasonable” levels, was not accelerating.

Shares of the company, which also announced a 4-for-1 split of its class A common stock, rose about 4 percent in extended trading.

Visa, which earns money from both the volume and value of transactions using its cards, said total volume increased to $1.90 trillion from $1.84 trillion.

The company stands to benefit from China’s recent decision to allow foreign card networks to clear domestic transactions, but Scharf said it remained unclear when the Chinese market would actually open and what the rules would look like.

Visa lost its right to process domestic payments in Russia in the middle of last year when Moscow hit back after the imposition of Western sanctions over its role in Ukraine.

Visa reaffirmed its revenue and margin forecasts for 2015 after taking into account an expected 2 percentage point negative impact from changes in foreign exchange rates.

About 60 percent of Visa’s transaction volumes are outside the United States.

“The stronger-than-anticipated U.S. dollar has led to substantially reduced travel into the U.S. from Europe, Canada, and Latin America,” Chief Financial Officer Byron Pollitt said on a conference call with analysts.

Visa, a Dow Jones Industrial Average component, recorded cross-border volume growth of 8 percent on a constant dollar basis, down from 12 percent in the year-earlier quarter.

The company’s net income rose to $1.57 billion, or $2.53 per Class A share, in the quarter ended Dec. 31 from $1.41 billion, or $2.20 per Class A share, a year earlier.

Analysts on average had expected earnings of $2.49 per share on revenue of $3.34 billion for the company’s first fiscal quarter, according to Thomson Reuters I/B/E/S.

Total operating revenue rose 7 percent to $3.38 billion.

Up to Thursday’s close of $248, Visa’s shares had gained about 15.5 percent since it last reported earnings on Oct. 29. The Dow Jones Industrial average .DJI rose about 2.6 percent in the same period.

(This version of the story corrects headline and first paragraph to remove reference to gasoline prices helping results)

(Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D’Souza and Ted Kerr)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/uWWa6WDr-MQ/story01.htm